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2012 in Review: Patents Hinder Innovation, But Hope for Reform Exists

As the year draws to a close, EFF is looking back at the major trends influencing digital rights in 2012 and discussing where we are in the fight for free expression, innovation, fair use, and privacy. Click here to read other blog posts in this series.

In 2012, the patent system continued to stand in the way of technology's progress, often acting as little more than a tax on innovation. But, also in 2012, we started to see some movement toward potential reform that would actually get the patents system out of the way of innovation.

For starters, Reps. DeFazio and Chaffetz introduced legislation in the House of Representatives that would help make the patent system work better for innovators and innovation—while also making life more difficult for patent trolls. The bill, the SHIELD Act, would, in certain cases, allow the judge to shift costs and attorneys’ fees to the losing party. This bill is also important because it would only apply to software and computer hardware patents. We've said before that a one-size-fits-all patent system doesn't make sense, especially when we’re talking about software. In 2013, we plan to support legislation like this that treats software differently from other technologies.

The courts were also busy in 2012. In its unanimous Mayo v. Prometheus decision, the Supreme Court upheld the simple rule that laws of nature, and obvious methods of working with them, are not patentable. Importantly, the Supreme Court extended its ruling to cover all categories of ineligible subject matter when it said “simply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patentable.” In that one statement, the Supreme Court made clear that abstract ideas—often the basis for dangerous software patents—would also face this heightened standard.

Following the ruling in Mayo, the entire Federal Circuit agreed to rehear a case called CLS Bank v. Alice. This case had earlier resulted in a dangerous ruling upholding patents covering a computer system that helped close financial transactions. EFF filed a brief, urging the Federal Circuit to throw out the abstract patent and proposing that the Court require patent owners to claim what they actually invent and nothing more.

2012 also saw people taking the patent problem into their own hands with exciting self-help remedies. For instance, Twitter announced its Innovator’s Patent Agreement (IPA), which says that if you assign your patent to Twitter, Twitter promises it won’t use that patent to sue anyone, except for defensive purposes. The IPA joins the Defensive Patent License (DPL), another important self-help tool that borrows heavily from the ethos surrounding the free and open source software community, honoring the important freedoms to operate and innovate openly. The DPL requires its users to provide free, non-exclusive licenses to their patents to anyone who likewise provides their patents to the same pool. The licenses can only be revoked if an offensive patent suit is filed.

We’ve said time and again that the patent system is broken. It stands in the way of innovation, drives businesses out of America, and requires that significant dollars go to patent trolls and lawyers instead of crucial research and development. 2012 started to show openings for real reform to software patents, and we look forward to continuing this conversation in 2013 and working together to make the patent system make sense. You can join us at defendinnovation.org.